INTC is due for a raise, but threw dividend growth investors a curve ball with today's announcement. I haven't figured out how I'm going to react to a loss in purchasing power yet (inflation). Many thoughts and questions are crisscrossing my mind at the moment. Should I give Intel the benefit of the doubt and more time? Are they telling me they aren't confident in their future prospects? Why even own any tech stocks at all with uncertain long term futures? Why didn't INTC give loyal shareholders at least a token boost? Is this how they treat owners? What can I replace it with?
Personally I'm not attached to Intel or any tech stock at all. Tech is the one sector I do not like. A 0% weighting is completely okay, and pretty logical from the long term perspective. I admit that I do have an attachment with certain companies such as Coca-Cola, Pepsi, Procter & Gamble, and Johnson & Johnson. It's pretty easy to imagine a scenario where these sorts of dividend champions reward investors for many, many years to come. With a company operating in a rapidly changing landscape such as technology, this blogger's simple mind doesn't know how it will play out. Uncertainty. Tech Stocks.
Thoughts?
Take a deep breath -- it sounds like you've had a strong immediate reaction to their announcement. I know it surprised a lot of investors.
ReplyDeleteWhile I'm also disappointed by the absence of a dividend increase, I think I understand why management made that decision. Recent earnings have been hurting and it would be prudent for management to be conservative until things turn around. With the new products coming out in the second half of 2013, I think we could see a turn-around (or the beginnings of one) by the end of the year. Perhaps a return to dividend growth will also come at that time. In the meantime, I will wait and see how they do this quarter. I still think Intel is well-positioned for future long-term growth.
Thanks for the comment.
DeleteMake no mistake, I'm not going to sell it immediately. No orders have been placed because I haven't made up my mind quite yet. In fact I haven't even listened to the conference call. Hopefully I'll have time over the weekend, and you can bet INTC is the number 1 conference call in my queue.
Cheers!
I basically agree with both of you DGM and CI, on not reacting on INTL. I would be concerned if it happens again next year for example. I do not hold this stock, but wanted to add it. My policy would be - if I held it I wouldn't be adding and sell only if they fail again. Since I do not hold it, I will not buy and wait. There are other companies out there to make up the loss.
ReplyDeleteIt's a tough decision. I know there are new products launching soon that have the capacity to do well in mobile. On the other hand, INTC could easily boost the dividend but chose not too. Hmmm, still thinking it through.
DeleteCI,
ReplyDeleteWell, technically INTC could wait until 2014 to raise the dividend and they will still pay out more in dividends during 2013 than they did in 2012, thereby retaining their streak. However, that is of little consolation to investors right now.
The dividend raise, or lack thereof, is my secondary concern with INTC. What I'm still waiting for, and have been waiting for since I first invested in the company back in 2011, is a material impact on mobile. I've yet to see a big change in that department. Certainly PC shipments, while down, are still large and the server business is doing well as far as I can tell. But mobile computing is the future and if INTC cannot get serious traction there I'm concerned for the company long-term. The Galaxy Tab 3 is a nice start and some of the MSFT products are doing okay.
This is the only holding that I'm seriously concerned about. NSC is also a little worrisome as they have not yet been able to solve the reduction in coal volume.
I'm with you on a 0% weighting to tech. I would also feel comfortable there. However, INTC has the goods. They can deliver. Time will tell, but my patience is running thin after two years now.
Best wishes!
Yeah I've been waiting for years too, patience can only last so long... I'm still torn with the company. One side of me knows they are rolling out new products in mobile soon. The other side of me can't tolerate a holding that is not performing as intended. How strict do I want to be with dividend growth stocks?
DeleteIf General Mills or Bank of Nova Scotia froze dividends I could tolerate it. INTC doesn't have the history but does have potential. Hmm
I sold INTC and bought DPS. My goal is to buy stocks that provide a yearly raise, if they don't, then they get fired. Stick to your guns.
ReplyDeleteI'm leaning that way at the moment. I think I'm going to let INTC go ex since it's only 10 days away and then make the final decision. I'll check out DPS, I haven't looked at it very closely.
DeleteThis hasn't been a good week for dividends. Only a 4% increase from NSC and no increase from INTC. I was expecting at least a token 4-5% increase out of INTC but I'm fine with the keeping it steady. The second half of the year is going to be huge for INTC and I'm hoping it's good huge and not bad huge. I'll give them a bit longer but if I don't see some improvement and infiltration to mobile then it'll probably be time to sell the shares.
ReplyDeleteGot a nice 10.3% increase with BGS this week.
DeleteINTC is banking on a good next product cycle, if that does not work...double whammy.
I feel it's high stakes for INTC at the moment. The new products seem to be ahead of the competition, but if it doesn't work out as planned a lot of effort & capital goes down the toilet. Personal computers seem to be declining making the other products more important. Mobile is going to be integral even if the margins are lower than other offerings.
DeleteI listened to the conference call and I didn't get the feeling INTC has supreme confidence. The lack of a dividend increase is another sign.
My tentative plan is to let it go ex, then start writing covered calls. I can only write 1 call which would leave me 84 shares not tied up. I'm glad INTC isn't a large position, although the ability to write multiple calls would reduce transaction costs tremendously.
This is a real bummer for sure. I have to admit I wasn't expecting this from INTC. They've done this in the past though back in the 2009 crash when they waited 6 or 7 quarters between increasing dividends again. Will we see a similar pause in raises again ?
ReplyDeleteI can understand not boosting the dividend during a recession. Times are not as dire right now though. INTC needs to get something going in mobile and I think it's why the dividend was (temporarily?) frozen. While they obviously sell products beyond mobile, mobile is a huge market. It might be as big of a test as the recession hence the freeze.
DeleteThis is why I don't like tech. They must continually outwit competitors. It's not an easy task, but I do believe Intel has as good of a shot as anyone.
I can understand that there being no raise. It appears that their EPS has been dropping for 2 years though admittedly I haven't looked too closely at them. I was waiting for a potential dividend raise before I did. Glad I waited.
ReplyDeleteGood job waiting! INTC has been in my portfolio for while now and I have enjoyed a couple healthy raises during that time. The first raise was something like 15%, and you can bet I was a happy camper back then. It's unfortunate they are behind the curve in mobile.
DeleteTechnology is not my thing personally (the latest gadgets don't interest me), although I did buy a smart phone last year. I still listen to cds and watch VHS. Haha! Just kidding about the video tapes!